Setting Up Taxes

Learn to configure your tax rates and tax settings

Adam Fried avatar
Written by Adam Fried
Updated over a week ago

Configuring preset tax rates can help make the booking process even faster and easier. Most studios will probably just have one rate. Still others might have multiple rates (i.e. local and state taxes). Once you've created tax templates, you can select them during the booking process or when creating an invoice to have the tax applied to that invoice. Let's take a look at how to set this up.

Navigate to Settings > Payments, Invoices, & Taxes  and scroll down to the Tax Templates section.

To create a new tax, click the "plus" icon and give your tax template a name. You can also set this template as your default so that it automatically loads when creating a proposal or invoice.

Tax Calculation Options

Tax can be calculated in one of three ways. You can calculate it against the subtotal of an invoice. 

You could also calculate the tax against the retail price of the products or services within the package. This is helpful if you are only required to charge tax on actual physical products and not services (and vice/versa). 

For example, a package might include a session fee (service), a print (product) and an acrylic block (product). If the tax is calculated against the services in the package, the tax amount would only apply to the session fee which is a service. And if it's just calculated against the products, it would only apply to the print and acrylic block because they are both products. In this way, you can specify what exactly is being taxed in an order.

The price and item type (product or service) is set on an item's configuration page under Settings > Products & Pricing > Products and Services

If necessary you can also calculate tax against the shipping costs in a package.

The third way to calculate tax is Inclusive where the tax is included in the total of the invoice.

Inclusive vs. Exclusive Tax

By default, tax rates will be Exclusive but ShootQ gives you the ability to set them as Inclusive if necessary.

A Tax-Exclusive rate computes the tax based on the order subtotal and adds the tax amount to the subtotal. For example, a $100 order with a 10% tax would generate $10 tax (100 x .10). When adding the tax amount to the subtotal,  the grand total of the order would $110. This is how places like the United States and Canada typically compute tax.

A Tax-Inclusive rate does not add the tax amount to the subtotal. Instead, the tax amount is a portion of the subtotal. Subsequently, the subtotal is the grand total of the order. For example, an order with a subtotal of $100 with a 10% inclusive tax generates $9.09 tax (100 / 1.1). The grand total is still $100 but the total includes $9.09 in tax (and $90.91 of products). This is typically how countries like Australia and New Zealand compute taxes.

If you would like to make your tax amount included in the subtotal, select the "Calculate Tax as Inclusive (included in total of invoice)" option.

Tax Collection Options

You can choose between two options for when you would like to collect taxes from your clients. You can collect the entire amount as a lump sum on the final payment in the payment schedule. Or you can collect it proportionally across each payment in the schedule.

Setting Tax Rates

The tax rate label will appear on your client's invoice as a line item. Examples of a label might be CA Sales Tax, Philadelphia Local Tax, GST, etc.

Most studios will apply an actual percentage as the rate. However, you do have the option to set a fixed dollar amount if a situation warrants it.

If necessary, you can also add multiple tax rates to your tax template. For example, if you collect local and state taxes, you might have two tax rates in your template like the example below.

Once your template is saved, you can use it when booking a job or creating an invoice. By selecting the template, the system will automatically load your tax rates and their configuration for an invoice.

Creating Multiple Tax Templates

Some users need to set up multiple tax templates because their particular situation requires it. For example, a studio that needs to apply different tax rates because they operate in a tri-state area would set up three different tax templates, each with a different tax rate for each state. When creating an invoice or booking a job they would select the appropriate tax template for that particular client.

What tax should I be collecting and how should I be computing it?

Tax laws differ from place to place. If you are unsure how you should be computing and collecting taxes, we highly recommend you contact your state's Department of Revenue (or other tax governing body). Tax rules are typically posted on their websites. You can also consult with an accountant or tax attorney.

Did this answer your question?